Benefits of a limited company
These are the five key reasons you should consider trading as a limited company.
Lower tax bills
Assuming you are making profits then trading as a limited company enables you to reduce the tax and National Insurance you pay.
The amount of the saving depends on the level of profit and tax year in question but the savings kick in at around £25,000.
If you do something wrong in your capacity as a business you can be sued.
Trading as a limited company provides protection of your personal assets because the person suing you can only go after business assets.
Keep in mind that you and we are moving to a more litigious society and customers are more inclined to use the legal system than ever before.
Also bear in mind that one of the people who may attack you is the taxman. If they believe you have made a mistake you could end up with a massive tax bill because they can go back many years. Another example of someone who can sue is an employee. The maximum award for unfair dismissal from 1st February 2013 is £111,100.
Trading a limited company and being the Managing Director is more impressive than being a sole-trader. You can also register for VAT voluntarily which will create the impression of being more established than you are.
If you are a sole-trader or partnership and want to get some investment, it can be quite complicated. But, with a limited company you can just issue shares.
And, if you trade as a limited company the bank can offer what’s called a Debenture or Floating Charge. This means the bank gets paid before any VAT or unpaid PAYE which can increase the likelihood of bank support.
When you trade as a company the money in the business is not yours.
If you want to take it you need to pay yourself a salary, repay money you lent the company or pay a dividend. This is sometimes seen as a negative but it’s actually good to treat the business as separate to you.
For a full review call today to arrange a meeting.